Home Office and Branch Accounting

1. On Sept. 1, SS opened a branch in Mindoro, shipping to it a merchandise billed at 60,000. During the month,
additional shipments were made at a billed price of 24,000. Returns by the branch for bad order goods were credited for
1,680. At the end of the month, the branch reported its inventory of 33,600 and its net loss for the month at 5,200.
Shipments to and from were consistently billed at 120% of cost. On Sept. 30, the branch inventory at cost ___________
and branch net income/loss as far as HO is concern are __________________.

2. MM started a branch office in Mindoro on June 1. On this date, MM shipped merchandise billed at 90,000. On June
15, another shipment was made at billed price of 36,000. During the month, the branch was credited for 2,520 for
damaged goods returned by the branch. On June 30, branch reported the ff.:
Inventory 50,400
Net loss for the month (7,800)
Shipments to and from the branch were uniformly billed at 120% of cost. In HO books, the Mindoro branch resulted
income from operation of _________________.

3. Mindoro Branch of MM Co., at the end of its first quarter of operations, submitted the ff. information:
Sales 300,000
COS:
Shipments from HO 280,000
Local purchases 30,000
EI (50,000) (260,000)
Gross margin 40,000
Expenses (35,000)
Income 5,000

Shipments to branch were billed 140% of cost. The branch ending inventory of 50,000, 6,000 was locally purchased.
Mark up on local purchases, 20% above cost. Branch expenses incurred by HO amounted to 2,500.
Branch EI _________________ and NI realized by HO from branch operation _____________________.

4. Selected accounts from Dec. 31, 2022 trial balance of MM and its branch follow:
MM Branch
Inventory Jan. 1 46,000 23,100
Investment in branch 116,600 -
Purchases 380,000 -
Shipments from HO - 209,000
Freight in - 10,450
Expenses 104,000 58,100
Home Office - (106,600)
Sales (310,000) (280,000)
Shipments to Branch (200,000) -
Branch merchandise mark-up (22,000)

As of Dec. 31, a shipment with a billing price of 11,000 was in transit to the branch. Freight cost, typically 5% of the
billing price, is inventoriable. Merchandise on hand at year-end were: at HO 64,000 and at branch 33,000. Compute
combined income of MM and branch _________________________.

5. MM operates a branch in Mindoro and the P/L data for HO and branch for 2022 follow:
HO Branch
Sales 250,000 75,000
Purchases outside 200,000 15,000
Shipments 30,000 37,500
Expenses 40,000 10,000
Inventories Jan. 1
HO 80,000
Branch: from outsiders @cost 7,500
Branch: from HO @20% above cost 24,000
Inventories De. 31
HO 55,000
Branch: from outsiders @ cost 5,500
Branch: from HO 2022 billing 26,000

Compute combined income _____________________________.